If you run a small business then you will be more than aware that every penny counts. You need to be profitable for your business to grow. There are many things to monitor, manage and review and so it can be difficult to ensure that you are always working to your optimum levels in terms of spending and profits. Here are 4 things every small business can do to reduce their spending and increase margins.
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Time tracking software
Whether it be paying employees or sub-contractors, implementing a time tracking software will allow faster and more efficient invoicing and billing. If you pay your staff hourly, they can enter their hours worked at the touch of a button. This will make it far quicker for payroll to arrange payment. It’s also an extremely useful tool in terms of project management. You can analyze data to ensure that your budgeted timescales and staffing costs are running as per your forecast. Time tracking for Quickbooks is also useful if you offer fixed fee services to clients. You can review historic projects to see how much employee time was taken for the job and mold your quotations around this information. If you have no means to precisely track employee time, you may be off the mark when quoting which could cost you thousands.
Review your staffing levels
All businesses need to review their staffing levels from time to time. Perhaps you have more staff than you need. Whilst losing staff isn’t a nice thing to do, paying people that you no longer require doesn’t make good business sense.
If, on the other hand, you are struggling to meet demand or want to expand then perhaps you want to consider taking on extra staff. Whilst it will mean additional salaries, it will give you the means to take on more clients and tender for more work, usually resulting in increased profits.
Cost of goods
If you are placing large orders regularly, it is a good idea to periodically review your cost of goods. Reducing your cost prices can have a huge impact on your margins. Your suppliers are more likely to offer competitive rates to regular and consistent customers, and so, it is always wise to renegotiate whenever possible. Whilst you may reap the benefits of being loyal to suppliers, it is still wise to check what the competition can offer. Providing they can offer a comparable service in terms of quality and timescales; you might want to consider switching. Knowing what the competition can offer also provides leverage when it comes to negotiating new deals and prices.
Keep running costs to a minimum
It is important to keep track of your running costs. If you are leasing, make sure that the rent levels you are paying coincide with the going rate for the location and size of your premises. If not, check the terms of your lease and, when feasible to do so, renegotiate. Don’t tie yourself into a lease you can’t get out of for an extremely long time. Taking a 5-year lease with an option to extend is a good idea. Things change and companies evolve. Premises that might suit your needs now may not do so 10 years down the line. If you own your premises, review your mortgage terms and see if there are more competitive rates available.
Many companies spend a good chunk of money each year on utilities. Where possible, consider switching energy providers to reduce your bills. Having motion-sensor or LED lighting installed can save your business a fortune over time. You might be surprised at the little consideration that staff give to energy use so, get them on board by implementing a ‘switch off’ policy in your office. If you explain the financial impact as well as the environmental implications, it’s more likely they will appreciate the issues and adhere to new policies.
An area that many companies don’t consider reviewing regularly is stationery acquisition. You might be surprised at how tempting staff find it to order fancy post-it notes or pens that aren’t even needed. Do you know how much is spent during a year? Put one member of staff in charge of ordering stationery and, where possible, set a budget or maximum spend. If you track spending and regular stock takes are carried out to avoid order duplication, you may save your company a substantial amount of money over time.
